IFC Performance Standards:Lessons Learned
Responding to continued criticism by NGOs, the World Bank Group (WBG) launched its
The IFC Performance Standards replaced the
Chapter & Verse
The IFC Performance Standards (PS) are organized in eight chapters (46 pages). Their self-explanatory headings are listed below:
- PS 1: Social and Environmental Assessment and Management Systems
- PS 2: Labor and Working Conditions
- PS 3: Pollution Prevention and Abatement
- PS 4: Community Health, Safety and Security
- PS 5: Land Acquisition and Involuntary Resettlement
- PS 6: Biodiversity Conservation and Sustainable Natural Resource Management
- PS 7: Indigenous Peoples
- PS 8: Cultural Heritage
Extractive projects often trigger most if not all of the above listed Performance Standards, requiring comprehensive environmental and social impact assessment (ESIA) studies. The IFC Performance Standards are complemented by additional tools. These include detailed
FPIC & BCS
The IFC Performance Standards require a very participative approach in terms of stakeholder engagement. This approach should ensure Free (of intimidation and coercion), Prior (timely and relevant disclosure), and Informed Consultation (understandable and accessible) – together commonly referred to as FPIC - with project affected communities. Project developers are further expected to secure Broad Community Support (BCS). This can be present and demonstrated even if some individuals or groups object to a project. IFC’s guidelines provide a series of tests to help examine and demonstrate if a project has met FPIC and secured BCS.
Health, Safety & Security
Project developers are expected to evaluate and mitigate the risks to health and safety of affected communities during the design, construction, operation, and decommissioning of a project. Safeguarding of personnel and property should be carried out in a legitimate manner that minimizes risks to the community’s safety and security, and safeguards human rights. Here, the
Biodiversity & GHG
In view of risks and vulnerability of biodiversity and natural resources, mitigation measures may be required even if project-impacted habitats have been previously disturbed or are not legally protected. Additional requirements include the need to evaluate greenhouse gas (GHG) emissions (threshold: 100,000 tons CO2 equivalent per year). Importantly, the concept of offsets has been introduced. This expands the strategic options available to project developers to address specific issues of concerns (see also Mining Magazine article Biodiversity Offset Mining.com Jan - Mar09).
Involuntary Resettlement (Resettlment Action Plan)
In addition to risks to livelihood of affected communities, resettlement programs can also be associated with significant costs, delays and reputational damage to project developers. Related IFC Performance Standards are complex and triggered by both physical displacement of people and by adverse livelihood impacts (economic displacement). Eligibility for resettlement assistance and compensation may exist even in the absence of lack of legal titles, such as the case with customary land use and communal ownership by Indigenous Peoples.
Revisions in Progress
In September 2009, the IFC launched a revision process of the IFC Performance Standards. An updated framework is expected to be released by early 2011. Expectations for clarification and changes are contained in the
In addition to changes related to human rights, Indigenous People, FPIC, climate change and water, I would also expect to see the references to and integration of other important tools and guidelines related to the extractive sector. Those which have also been included in the Canadian Government’s March 2009 CSR Strategy include the
The introduction of the IFC Performance Standards has been a fairly recent phenomenon. ‘Local EIAs’ (environmental impact assessments), designed primarily to satisfy local permitting requirements, may fall short of being ‘bankable.’ Learning from CFOs, Readiness Assessments are being used as a tool to help identify gaps, improve processes and documentation, and provide training to key staff in order to simplify and shorten the due diligence process applied by lenders and investors.
I would like to thank contributors and co-presenters of my courses on IFC Performance Standards and Equator Principles: Jamila Abassi, John Aronson, Dr. Helena Barton, Dr. Martin Birley, Kevin Bortz, Kevin D’Souza, Art Fitzgerald, Wayne Forman, Dr. William Kennedy, Timothy Murphy, Dr. Don Proebstel – and all the course participants who generously shared their own knowledge and insights.
Note: This article was published in the March 2010 issue of the Mining.com Magazine and can be downloaded here: IFC Performance Standards - Mining Magazine March 2010 (PDF, 120 KB).
About the author: Mehrdad Nazari (MBA, MSc, LEAD Fellow) is a Corporate Responsibility, Sustainability Reporting & ESIA Advisor, and Director of